A perspective on the health care debate from a progressive, but independent vantage. Offering solid empirical information that sheds light on how the current system actually works, not how it's portrayed.

Will evidence-free policy ideas never cease??

“Texas should shift many of its 3.3 million Medicaid recipients into private health insurance to avert a fiscal meltdown, a conservative group is urging.” So leads a February 21 story from the Dallas Morning News.

Will evidence-free policy ideas never cease?? (that’s a rhetorical question)

Let’s look at what we know about Medicaid, its relationship to “fiscal meltdowns,” and the privatization of coverage.

Medicaid enrollment has exploded during the Great Recession, which is what we’d expect as people lose their jobs, wages fall, and employers shed coverage they can no longer afford. Across the 50 states and Washington, DC, according an analysis by the Kaiser Commission on Medicaid and the Uninsured, Medicaid coverage increased by 6 million people from 2007 to 2009 to a total 48.7 million, a 14% increase in just two years. Likewise, Medicaid spending grew by 16% to $346 billion. That’s a lot of money.

But is Medicaid inefficient and more costly than the private health care system? During the 10-year period of 2000-2009, Medicaid spending for acute care (that is, setting aside Medicaid long term care costs) per beneficiary increased an average 5.6% per year, while monthly premiums for employer sponsored coverage increased 7.7%, 38% higher!

Is Medicaid more efficient when it’s provided through private insurance companies? During that same 10-year period, while average Medicaid acute care spending went up 5.6% per year, its spending for managed care increase more than twice that rate, 13.1% per year!

Hmmm.

Need more evidence? An analysis and simulation by Hadley and Holahan published in 2003/2004 found that Medicaid coverage is less costly than private insurance coverage if they were to cover the same types of people (they don’t, Medicaid patients are much sicker and more complex on average than those served by insurance companies). Indeed, their simulations found that, if the average adult with Medicaid coverage were given private coverage, costs would increase by 18% and 3% for children. What about for the most complex patients? If a Medicaid-covered adult in poor health was switched to private coverage, costs would skyrocket by nearly 54%.

So, contrary to the lead-in to that Dallas Morning News article, the Texas Public Policy Foundation, the group that’s urging Texas to move Medicaid patients into private plans, is actually advocating for higher Medicaid spending and for hastening a “fiscal meltdown”!